U.S. settles lawsuit over T-Mobile's unauthorized charges

T-Mobile has agreed to settle a lawsuit filed by the U.S. government over unauthorized charges placed on customers' bills, a practice known as cramming, and to pay at least $90 million, two U.S. agencies said on Friday.

The Federal Trade Commission had filed a complaint against T-Mobile in July, saying the company had put subscriptions for services like horoscopes or celebrity gossip delivered by text messages on consumers' mobile phone bills, often without their knowledge.

T-Mobile received 35 percent to 40 percent of the amount charged, the FTC said in July. Many of the services cost $9.99 a month.

The Illinois attorney general's office said T-Mobile estimates that about 450,000 Illinois residents who incurred such charges have not been refunded.

The settlement calls for T-Mobile to refund any unwanted, crammed charges, with its payments totaling at least $90 million. The company must also pay $18 million in fines to state attorneys general and $4.5 million to the FCC.

If the refunds and fines do not reach $90 million, T-Mobile must pay the FTC the balance.

T-Mobile, Verizon, AT&T and Sprint agreed in November 2013 to stop billing customers for third-party services after pressure from 45 state attorneys general.

T-Mobile, the fourth-largest U.S. mobile phone provider by number of customers, said in July it was already reaching out to "crammed" customers to tell them how to request a refund.

But the FTC said that before T-Mobile decided to stop billing for the third-party charges, it had deceived customers by including those amounts in "use charges" and "premium services." The company never spelled out that a portion of the charges was for the third-party services.

Sprint is expected to face a $105 million fine from the FCC in coming weeks over cramming, according to officials at the commission.

A $105 million fine would tie as the agency's largest. In October, AT&T agreed to pay that amount to settle similar cramming allegations in a case negotiated by the FCC and the FTC.